Landlords take note: Court Appeal applies residential statutory service charge regime to live/work units

The Court of Appeal’s decision in Cloisters Business Centre Management Co Ltd v Anvari [2026] EWCA Civ 17 confirms that statutory service charge protections can apply to live/work units where any degree of residential use is permitted by the lease, even if that residential use is only ancillary.

Background 

The appeal involved long leaseholders of premises in a converted Victorian convent in Battersea. The leases described the premises as offices with ancillary residential use, although in practice the units were being used for storage. The issue was whether the leaseholders could nevertheless be considered lessees of a “dwelling” under the relevant statutory provisions (Section 38 of the Landlord and Tenant Act 1985).

The unit in question comprised a suite of rooms including a kitchen and shower room, and was described in the lease as a “self‑contained unit”.

Under Section 18 of the 1985 Act, statutory service charge protections apply to tenants of dwellings. The landlord argued that live/work units fall outside the statutory regime where any residential use is subordinate to commercial use and, therefore, disputes about recoverability of service charges should not fall within the First‑tier Tribunal’s jurisdiction.

The tenant contended that the permitted residential use meant the premises qualified as a “dwelling”. The County Court agreed, and so did the Judge on appeal who upheld that decision. The landlord then appealed to the Court of Appeal but that appeal was unsuccessful.

Decision 

The Court of Appeal confirmed the following: 

• The live/work unit was a “dwelling” and therefore benefitted from the statutory service charge regime in the 1985 Act.
• The fact that residential use of the unit was only” ancillary” did not prevent the unit from being a “dwelling”.
• The Court did not place any weight on the fact that the unit was described as being for storage, because the lease expressly permitted residential occupation.

On that basis, whilst each case will turn on its own facts, where a lease permits any form of residential use — even if ancillary to commercial use — landlords may find themselves subject to the residential statutory service charge regime.

Practical implications 

Landlords will want to ensure that they understand whether the residential service charge regime applies to a live/work unit in their portfolio. Where the regime applies, this can lead to:

• exposure to First-tier Tribunal challenges to service charges; and
• tighter limitation periods for demanding service charges.

Comments 

This decision reinforces a central principle: any degree of permitted residential use can activate the residential statutory service charge regime, even in premises that appear predominantly commercial such as a live/work unit. For landlords, the key takeaway is the need to look beyond labels and focus on both the current use of the property and the use the lease permits. Landlords may want to seek professional advice where they are unsure how to treat a particular unit in their portfolio as failure to comply with the residential service charge regime, where it applies could be costly.